Suppose that Toys4Lots is in a market with imperfect competition. The graph below shows the firm's demand (D), marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. Determine the prot-maximizing level of output and the associated prot-maximizing price. Use the red rectangle (cross symbols) to shade the area that represents the rm's total cost at this quantity. PRICE [Dollars per toy] 100 . [TotalCostj 9D I. + 80 7|] 6|] 5|] ,. A 30 2|] 10 D 1.5673910 QUANTITY [Thousandsoftoys] E E Evaluate the following statement: "If the rm chooses to follow the supply rule and produce where MR = MC, demand is price elastic; so therefore, it is possible to increase prot by increasing output." 0 That is incorrect. In fact, rms should produce where MR is greater than MC to ensure that they earn positive prot. That is incorrect. Increasing output when demand is price elastic will only increase total revenue, not prot. That is correct. This is the exact reason that rms always operate on the price-inelastic portion of the demand curve. That is correct. The prot maximum occurs where demand is unit elastic. 000